Former Assistant Treasurer, Australia
The man who held the position of Assistant Treasurer of Australia for most of this year (up until September’s election which saw a new government take power) follows in the footsteps of his former boss, Wayne Swan - who was Treasurer and Deputy Prime Minister in the same Labor government - in appearing in the Global Tax 50.
And if Swan’s role as Deputy Prime Minister meant he had less time for Treasury matters, this certainly was not evident because Bradbury was such a vocal and pro-active force on a variety of tax issues.
Though his day job saw him handle issues such as better aligning company tax payments with GST payments, one specific area in which Bradbury has been a dominant figure this year is in spearheading Australia’s efforts to clamp down on tax avoidance and tax evasion in the context of multilateral attempts to tackle base erosion and profit shifting (BEPS).
Here, Matthew Gilleard talks to Bradbury about his influence and achievement, analysing some of the work he completed while in office and looking at what Australia must do next to build on those foundations, particularly as the country is poised to take over the chairmanship of the G20.
International Tax Review: What do you consider to have been your biggest influence on tax?
David Bradbury: I have been most proud of the role I have played in tackling tax avoidance and elevating the BEPS debate onto the Australian domestic policy agenda.
Initiating a wide-ranging domestic debate around BEPS has led to the emergence of a bipartisan political consensus over the need to take action. Against the backdrop of Australia hosting the G20 next year, this has helped to position the Australian government to play an important leadership role in global efforts to address BEPS.
ITR: You spearheaded much of Australia’s work in these areas [tackling BEPS and avoidance] and were very vocal in doing so. What was the motivation behind your drive to try and lead the way both domestically and internationally on these issues?
DB: As Oliver Wendell Holmes Jr observed: “Taxes are what we pay for civilised society”. Making a contribution through the payment of our taxes is a central part of the social contract.
As governments all over the world face up to the challenges of fiscal consolidation, this point has never been more relevant. We all enjoy the benefits of our public infrastructure, whether it be physical infrastructure or the infrastructure of well regulated markets, skilled workforces and the machinery of government and justice that supports the rule of law.
This infrastructure must be paid for and if some of the most profitable businesses in the world are not paying a fair contribution through their taxes, then others will be left to carry a disproportionate burden.
This is unfair to those hardworking members of society who are making a reasonable contribution through their taxes. Equally it is unfair to the competitors of these businesses who are disadvantaged by the fact that they are making a contribution to government revenues that their competitors are not.
Whenever I raise the importance of making sure large multinationals are paying their fair share of tax, some business leaders and advisers respond by saying that these companies are paying the tax the law requires them to pay. When we see how little tax some of the world’s largest and most profitable businesses are actually paying, it simply serves to remind us of the urgent need to change our laws and address this issue.
ITR: What was the biggest area of focus for you during your time in office and what actions characterised this?
DB: Over the past 12 months my focus has been on tackling tax avoidance and addressing base erosion and profit shifting activity in Australia.
In tackling tax avoidance, our government implemented amendments to our general anti-avoidance rule (GAAR - Part IVA), modernised our transfer pricing rules, and improved transparency by introducing new arrangements regarding the publication of the levels of tax paid by large multinational enterprises. I was also proud to have secured greater information sharing cooperation, which included the signing of a revised tax treaty with Switzerland that includes a legal basis for the exchange of taxpayer information between the Australian and Swiss tax authorities.
On the BEPS front, I established a Specialist Reference Group to examine the issue and led the government’s efforts to construct a package of measures to tackle BEPS, which was announced in the 2013 Budget. While the intervening election prevented the Labor government from implementing the reforms, it is pleasing to see that the incoming government has embraced the overwhelming bulk of reforms announced in the package.
ITR: What should the priorities be for Australia from a corporate tax perspective for the year ahead?
DB: Obviously BEPS should continue to be a major area of focus over the coming year, especially since Australia has the opportunity to play a leading role as the G20 host.
The new government has also announced it will move to clear the backlog of tax measures that have been announced but not yet enacted, some of which go back to when they were last in office. Provided this process is handled with care, this should be a welcome development.
While the new government is proposing to reduce the corporate tax rate by 1.5% from July 1 2015, this will be offset, for larger businesses, by the introduction of a new paid parental leave tax. These changes, however, will do nothing to address the ongoing question of the international competitiveness of the Australian corporate tax rate. This is an issue that should be addressed in the future.
Of great interest will be the new government’s commitment to undertake comprehensive community consultation ahead of delivering a White Paper on Tax Reform within its first two years in office. No doubt these consultations will begin throughout the course of the year ahead. From my perspective, I hope the process triggers a national conversation about what will be needed to maintain a fair, efficient and internationally competitive tax system.
Former Assistant Treasurer David Bradbury has also written an exclusive article for International Tax Review looking at the issue of addressing BEPS ahead of Australia’s hosting of the G20.
The Global Tax 50 2013
UK Big 4 tax partners
BRICS Cooperation Agreement